Who invests most in NZ?

18/06/2013

People from which country invest most in New Zealand?

The xenophobes will say it doesn’t matter, foreigners are foreigners and should go home and take their money with them.

Then there’s a group whose opposition to foreign investment is targeted at Asians in general and Chinese in particular.

But a survey by KPMG shows that they have only a small stake here:

It found Asian investors as a whole accounted for just 16% of total approvals during that period and of that, China accounted for just 33%.

That even includes high-profile purchases such as Chinese whiteware manufacturer Haier becoming a cornerstone shareholder in Fisher & Paykel Appliances and the acquisition of the Crafar farms by Shanghai Pengxin.

So people from which country invest most here? Australia – which accounts for about 45% of direct foreign investment.


Risk good reason for sale

10/04/2013

Opponents of the government’s programme for the partial sale of a few state owned assets are seizing on the risks to investors.

They purport to be worried that people who buy shares in Mighty River Power might lose money.

Their concern is no more than crocodile tears because they also complain that only the wealthy will be able to afford the shares.

But in raising fears of potential losses, they appear not to understand that if no shares are sold the government carries all that risk.

The risk of investment in non-core assets is not a reason for continued state ownership. It’s a very good reason the state should divest itself of them.

The government ought to ensure every cent of public money is put to best use.

There is potential gain in any business but there is also a potential for loss and that’s not a risk the state should be taking when there are far better uses for its very scarce resources.

While we’re on the subject of risk, Landcorp has told Shanghai Pengxin, which took over the former Crafar farms from receivers, that its investment will make a loss this year.

Chief executive Chris Kelly said the drought has had significant affect on revenue. Extra capital expenditure by Shanghai Pengxin has also been required.

People opposing land sales to foreigners are concerned about profits going overseas. At least this year, the owners will be losing money.

The risk the state takes in owning non-core assets is also illustrated by Landcorp’s half-year report:

At the time this report went to the printer, an operating result of around$6 million to $8 million for the full year 2012/13 was expected. Since then,Landcorp has experienced the worst widespread drought in many years. As a result, it is unlikely that the Company will report an operating profit for the year and consequently it is not likely to pay a full year dividend.
Around $1.6 billion in assets and no dividend. There are far better, and less risky, uses for public money than that.

 


Rural round-up

09/04/2013

Nine possible water storage sites identified – Rebecca Harper:

Nine potential dam sites have been identified in a preliminary study of water storage options in Wairarapa.

The “whole of the valley” approach could result in up to 60,000 hectares of Wairarapa Valley being irrigated if the scheme goes ahead. This would require 250-300 million cubic metres of water a year and the dams would be designed to re-fill before summer each year. 

Only 10,000ha in the valley is irrigated now. So far 201 farmers, representing 269 properties covering 51,000ha, have been surveyed. . .

Dairy company signs deal with Chinese:

New Zealand’s only Maori owned and controlled dairy company is signing a deal with Shanghai Pengxin on Tuesday to process milk from the former Crafar Farms into UHT products for export to China.

Miraka Ltd, which operates a big factory near Mokai northwest of Taupo, is in Shanghai with iwi who historically affiliate with the Crafar Farms to initial the lucrative venture. . .

The status quo leads to peasantry –  Conor English:

Recently about 1000 meat and beef farmers met in Gore. This meeting highlighted the concern that these farmers have about the profitability and sustainability of their farming businesses.

There are questions about the ability of the current supply chain arrangements to deliver appropriate returns to farmers so that they and their families can get ahead while New Zealand as a country can take advantage of the increasing market opportunities there are in a world of more people, protein and wealth. 

About three years ago Federated Farmers launched a T150 campaign, which set the aspiration of farmers receiving $150 for a mid-season lamb. It’s a simple idea. Right now this seems a pipe dream, but it is actually critical to New Zealand that this target is reached sooner rather than later.  . .

Farmers support Auckland Plan having Immediate Legal Effect:

Farmers have swung in behind Auckland’s Unitary Plan having immediate legal effect and Federated Farmers is to tell Parliament’s Local Government and Environment Committee Select Committee that tonight, when the Committee meets in Auckland to hear submissions on the Resource Management Reform Bill.

“Metropolitan Auckland’s past failures to address growth issues properly has resulted in flow-on effects for rural Auckland,” says Wendy Clark, Federated Farmers Auckland provincial president.

“Delaying the implementation of Auckland’s Unitary Plan for as much as three or four years will result in added costs for Auckland’s rural ratepayers. It will also hinder the resolution of metropolitan Auckland’s all too obvious housing issues. . .

Poor judgement quota full for now – Steve Wyn-Harris:

Good judgement, as they say, arises from previous bad judgement.

You can’t beat experience.

When I started farming about 30 years ago, I would make a bad judgement call or poor decision probably once a week and time elapsed might mean I am now being generous to my past self.

But slowly and steadily over time that interval extended.

The times I would get a motorbike in an awkward and potentially dangerous situation became less frequent. Instead of deciding to leave the ewes in a paddock for another couple of days, I learnt to shift more frequently. . .

Drought Shout 2013: Farmers woes to take a back seat for a day:

When farmers from all over the North Island attend this week’s Drought Shout in Mangatainoka, work is expected to be the last thing on their minds.

Daniel Absolom, from Focus Genetics is travelling from Hawke’s Bay with a ute load of others to attend Thursday’s Drought at Tui Brewery and says it will be an opportunity to catch up with old friends and colleagues and have a good time.

“This will provide a much needed tonic for drought affected farmers and an opportunity for them to get off the land for a few hours and catch up with their mates,” he says. “It’s been an incredibly tough year thus far and I’m a firm believer in a problem shared is a problem halved.” . .


Rural round-up

10/11/2012

Synlait Farms Takes Out South Island Farmer of the Year title for 2012

Canterbury-based dairy enterprise Synlait Farms clinched the Lincoln University Foundation’s South Island Farmer of the Year competition for 2012 last night (Thursday 8 November 2012) with an entry that judges hailed as a prime example of New Zealand’s leadership role in innovative and entrepreneurial agricultural practice.

Chief Judge Bob Simpson said that all four finalists demonstrated leadership, excellence and innovation.

“Any of the finalists could have won this award tonight,” Simpson said. “But in the finish it was Synlait’s blend of family-based traditional farming practices with the very best of modern corporate innovation and management systems that saw this multi-farm company stand out. Synlait’s approach to its people, its stock and its land can be held up as an example of what can be achieved when good leadership and good people go hand-in-hand.” . . .

Landcorp ready to run Crafar farms – Andrea Fox:

State farmer Landcorp says its Chinese client Shanghai Pengxin will settle the Crafar farms purchase with receivers on November 30 and it is scheduled to start managing the dairy farming estate the next day.

Landcorp chief executive Chris Kelly said that to the best of his knowledge this was the timetable that would mark the end of the tortuous three-year Crafar farms sales process.

Landcorp’s management of the 16 central North Island farms is a condition of Government consent to the controversial sale to the Chinese company, which has waited through a string of court challenges and consent processes to put its money on the table as receiver KordaMentha’s preferred bidder. . .

Wool growers asked for $10m – Gerald Piddock:

Wools of New Zealand is asking for $10 million from strong wool growers in a capital raising offer to expand its sales and marketing capabilities.

The raising would give strong wool growers the opportunity to invest in a grower-owned sales and marketing, company, chairman Mark Shadbolt said.

The company has made significant inroads into transforming Wools of New Zealand into a commercial entity, aimed at connecting customer to grower, he said. . .

Wine sector senses a whiff of recovery – Claire Rogers:

The wine industry is on the mend after a gruelling few years that prompted a string of closures and collapses, New Zealand Winegrowers says.

One recent high-profile casualty, Hawke’s Bay winery and vineyard Matariki Group was put into receivership in September owing creditors, including the Government, about $11.2 million. Receivers PricewaterhouseCoopers said the winery struck financial trouble after reduced harvests in 2011 and 2012 led to weak sales, and that was compounded by a lack of capital.

New Zealand Winegrowers chief executive Philip Gregan said the 2012 harvest was down 19 per cent on 2011, and that had dealt another blow to the industry, which had been struggling since 2008 with over-supply and weak demand from the global downturn. . .

Sea air tenderises spring lamb – Jon Morgan:

Logan Brown’s head chef Shaun Clouston takes a bite, chews thoughtfully, swallows and then licks his lips.

“By crikey, that’s beautiful,” he says, shaking his head slowly, wonder in his voice.

On the plate is a lamb rump, finely sliced, with kumara, crushed peas and roasted tomatoes. It’s a simple dish. “I want the lamb to be the hero,” Clouston says.

This is not any lamb. The meat is from a young spring lamb, only 4 months old when it was sent to slaughter, and from a farm on the coast south of Whanganui. . .

Kiwi to Lead International Tree Society

A Dunedin arborist became the first-ever Australasian president of the International Society of Arboriculture (ISA) last week.

Mark Roberts, an experienced arborist and academic director of horticulture training firm Thoughtplanters, is the second non-American elected to lead the 88-year-old society.

More than 20,000 arborists from 18 countries are members of ISA today. . .


Rural round-up

23/10/2012

New growing sites may help save kiwifruit – Jamie Morton:

The Psa bacterium is here to stay so growers must manage it, says horticulture expert.

Kiwifruit growing regions outside the Bay of Plenty could soon play bigger parts in a $1 billion-a-year industry battling a bacterial scourge that is here to stay.

Professor Ian Warrington, co-president of the International Horticulture Congress, has suggested ways New Zealand could live with Psa-V, which has now spread as far as Hawkes Bay since its discovery in heartland Te Puke nearly two years ago. . .

Landcorp denies Crafar farms ale meddling – Andrea Fox:

Landcorp chief executive Chris Kelly says he’s getting fed up with suggestions that, as intended Crafar farms manager for Chinese purchaser Shanghai Pengxin, he is frustrating iwi efforts to buy two of the central North Island farms.

The state-owned enterprise boss said he had heard the rumours and they were “simply not correct”.

However he said that as the two farms at Benneydale constituted a significant 25 per cent of the whole 16 farm Crafar estate package, personally, he would be asking Landcorp’s future Chinese partner to consider why it would want to sell them. . .

 

Trial may be of global importance:

The Clutha Agricultural Development Board’s latest project, on the value of probiotics to calves in their first few weeks of life, is believed to be of national and possibly international importance.

The project involved about 300 calves on three farms in the Clutha district.

In New Zealand, only one limited study of the possible weight gain and health benefits to calves has been done previously, and the board was thought to be undertaking a “significant study of national and perhaps international importance”, the board said. . .

Future of sheep farming ‘not flash‘ – Sally Rae:

The potential for New Zealand’s primary sector is significant but the industry must get better at how it takes its products to markets, both individually and collectively, New Zealand Merino Company chief executive John Brakenridge tells Agribusiness reporter Sally Rae.

Imagine New Zealand without sheep and without a sheep industry.

That is a scenario New Zealand Merino Company chief executive John Brakenridge poses.

A scenario that he says is “actually quite on the cards” if the status quo continues. . .

Bettering deer genetics just the job for Sharon – Sally Rae:

Sharon McIntyre reckons her new role as DEERSelect manager is about “a perfect fit” for her skill set.

The Gore-based farm consultant, who has been heavily involved in genetics for 25 years, was enthusiastic about the part-time position.

She has provided technical assistance to Sheep Improvement Ltd (SIL) for five years and it was a “logical step” to be involved with improving deer genetics as well.

DEERSelect runs a system to evaluate the genetic worth of stags which then allows breeders and finishers to select for desirable traits in their deer herds. . .


Criticised for following law?

16/08/2012

What is David Parker saying? (starts at 1:01)

. . . it was that it was a legal decision not the right decision. The Court found that the Minister acted within his powers to approve the sale of the Crafar Farms to the Pengxin Shanghai syndicate but not that he acted reasonably because that’s not their mandate?

Is he criticising Land Information Minister Maurice Williamson for following the law?

If he had acted illegally would that have been reasonable?

It might be on Planet Labour. But in New Zealand under National the government follows the law.


Ministers can use judgement

12/08/2012

Quote of the day:

 . . .   the court’s robust decision restores much-needed clarity to New Zealand’s foreign investment regime.

The upshot of the Fay-led challenges is that the bar has been raised for foreign buyers of farms or businesses worth more than $100 million. But Cabinet ministers are entitled to rely on their judgment when it comes to assessing the additional value to New Zealand that a foreign bidder brings when acquiring assets.

Critically, the court has shot a massive hole in the notion that a foreign buyer must have direct industry experience if they are to buy local farms or $100 million-plus Kiwi businesses. Fran O’Sullivan

Some legislation allows Ministers no latitude at all, the law is the law in those cases and Ministers have no discretion over its application. But other legislation, among which is that governing overseas investment, allows them to exercise their judgement.

In this case, the sale of the former Crafar Farms to Shanghai Pengxin, they decided that the company could add value to New Zealand, and imposed very strict conditions on the purchase to ensure it would.

The opposition to the sale is almost all based on emotion.

Now the Court has ruled in the purchaser’s favour the company and Landcorp will be able to get on with running the farms and the sooner they do that the sooner they’ll prove the doubters wrong.


Rural round-up

11/08/2012

Shanghai Pengxin finally able to get on with its dairy investment – Allan Barber:

After one of the most drawn out sagas of recent times, the Court of Appeal’s ruling at last looks as if Shanghai Pengxin can complete its takeover of the Crafar farms.

The Fay/Maori Purchase Group has announced it will not make any further appeal, but, in Sir Michael Fay’s case, it will go back to business as usual and, in the case of the two Maori trusts, continue to negotiate the acquisition of two farms. However the iwi are still considering an appeal against the latest decision, while negotiations continue.

This sale process has caused much debate and involved very costly court cases which in the end have merely served to review and confirm the original decision and it’s hard to see on what basis a further appeal could expect to succeed. . .

Wintering barns ‘good idea’ not obligatory – Shawn McAvinue:

Wintering barns are a good idea but shouldn’t be made mandatory, says a Western Southland dairy farmer. 

    Dairy farmer Philip van der Bijl said the new winter shed on his Broad Acres farm, near Mossburn, was worth the investment. 

    If Environment Southland forced farmers to build sheds that would take money out of the farming community and only make Australian banks wealthier, he said. . .

Red cattle light up Shannon farm – Jon Morgan:

The late afternoon rain clouds have fled to the Tararua Range and a watery sun casts a soft light across the rolling pastures. In this light, a mob of cattle take on an exotic hue, their velvety, chocolate-red coats radiating a warm, lustrous glow. 

    It would be wrong to say farmer Kelvin Lane is unmoved, but he’s showing off his cows and his eyes are on their straight backs, muscled bodies and calf-bearing hips. 

    It is the dark red colour that first attracted him to the cattle, which are of the uncommon red poll breed. “They’re different, aren’t they?” he says. . .

A Hereford fan for life – Sue O’Dowd:

North Taranaki beef breeder Rodney Jupp is on a mission to introduce “Hereford Prime” beef to the region’s palates. 

    Right now he’s negotiating a deal with a Taranaki butchery, and hopes the meat will be on sale in the province within the next month. 

    “I’m working really hard to get Hereford Prime launched in Taranaki,” he said. . .

Pipfruit Growers Expect Slightly Improved Profitability

Pipfruit growers are expecting a small improvement in profitability this year, due to a lift in prices.

The Ministry for Primary Industries has released an analysis of pipfruit production and profitability as part of its annual Farm Monitoring Report series. The report is based on models of a Hawke’s Bay and a Nelson orchard and an overview of the financial performance of typical orchards, based on information gathered from a sample of growers and industry stakeholders.

A cool spring delayed flowering and harvest by around two weeks this season. Hawke’s Bay also had below-average temperatures and lack of sunny weather over summer. . .

Anti-GM campaigners warn of dangers – Gerald Piddock:

Two Australian farmers are warning New Zealanders to make sure their country remains free of genetically engineered and modified organisms. 

    Allowing GM products to be produced would put at risk New Zealand’s clean green brand, they say. 

    Western Australian farmer Bob Mackley and Victorian farmer and anti-GM advocate Julie Newman are touring New Zealand to deliver their message. With them is Green Party primary industries spokesman Steffan Browning. They were in Ashburton last week. . .

Entries open for 2013 Ballance Farm Awards:

Entries are now open for the 2013 Canterbury Ballance Environment Farm Awards.

The Awards, which have been running in the region for 10 years, celebrate responsible land stewardship and sustainable farm management practices.

Jocelyn Muller, the Canterbury Regional Coordinator for the Ballance Awards, said the awards continue to go from strength – to – strength in Canterbury.

“The Awards recognise and celebrate that best practice on-farm management is good for business and good for the environment.   . .


Shanghai Pengxin has nous to run farms – court

08/08/2012

The Court of Appeal is satisfied that Shanghai Pengxin has the nous to run what were the Crafar farms.

The Court of Appeal has turned down a bid by merchant banker Michael Fay and two Maori trusts to stop the sale of 16 Central North Island farms, saying it was satisfied with the general business acumen and experience of the Chinese buyer.

Judges Mark O’Regan, Terence Arnold and Douglas White dismissed the judicial review, saying Jiang Zhaobai’s ability to bring himself from humble beginnings to become “a person of some stature in the Chinese commercial world,” would satisfy the minister making the decision in approving the sale of the Crafar family farms.

“The information provided to the ministers was sufficient to enable them to determine that he and the other controlling individuals had generic business skills and acumen relevant to the Crafar farms investment,” Judge Arnold said in delivering the judgment.

“We see nothing in the language, taken in context, to indicate that Parliament had in mind that an investor must have any particular combination of the requisite skills and experience,” the judgment said.

Agri-business experience was only one factor which needed to be taken into consideration.

 “While apparently important, it did not lead to a conclusion that was insupportable or unreasonable in the absence of that experience.”

The judges said even if the ministers erred in accepting Pengxin’s agribusiness investments, “it is unlikely that we would have exercised our discretion to grant a remedy.”

That’s because the ministers decided the foreign investment would have a substantial benefit to New Zealand, the deal hasn’t been settled and creditors are still waiting on repayments, and that the farms are being operated by the receiver in a manner than presumably “involves minimal further investment.”

Those who oppose the purchase forget about the creditors who are owed millions of dollars. The higher the purchase price, the more the creditors will recover.

I don’t think the state should be farming but Landcorp farms are generally well managed. Their experience and Shanghai Pengxin’s money should be good for the farms and the stringent conditions imposed by the Overseas Investment Office will result in benefits for the country too.


Do we need a race relations commissioner?

13/06/2012

Like Inventory 2 at Keeping Stock, I’m not sorry that Race Relations Comissioner Joris de Bres is coming to the end of his term.

Sometimes his pronouncements, or lack of them suggested he thought some races were more equal than others.

The Justice Ministry is inviting applications for a replacement..

It comes as an amendment to the Human Rights Act has been introduced to Parliament that could see the position abolished. Mr de Bres, 65, had “some concerns” about the possibility, but the amendment had not yet passed its first reading.

I have just read Alison Wong’s book As The Earth Turns Silver.

The plot is fiction but based on facts about discrimination against Chinese immigrants.  The book also depicts discrimination against women. It was less violent but still harmful.

Recent reaction to the sale of farms to Shanghai Pengxin,  shows that race relations haven’t progressed nearly as far as they need to.

But discrimination isn’t confined to race and I’m not convinced singling it out for special treatment is necessary when similar ignorance is directed at people for other reasons including, but not confined to, gender and disability.

All such discrimination is wrong and I think the Human Rights Commission ought to be able to counter it without the need for individual commissioners.


Whose money is it?

22/04/2012

Opponents to the sale of the Crafar farms to Shanghai Pengxin, and other foreign investment, talk about the owners taking money out of New Zealand.

But whose money is it?

Anti-Dismal clearly explains it’s ours and it’s useless anywhere else:

. . . Let us assume for a moment that these evil foreigners make a NZ$1 profit which, in an effort to piss-off Michael Fay, they wish to take it back to China. How do they do it? Clearly a New Zealand dollar isn’t worth anything in China so the Chinese holder of NZ currency will have to sell their NZ$1 to buy Yuan. But why would anyone want to buy said NZ$1? The only use for a NZ$s is to buy something made in NZ. Thus the buyer of the NZ$s must want it to buy a NZ export of some kind. What is Michael Fay’s problem with this? The NZ$1 doesn’t go overseas in any meaningful way, it gets spent on New Zealand produced goods and services no matter who gets the profits from the ownership of the farms. If a New Zealander gets the profits they spend them on New Zealand made goods and services, if a foreigners gets the profits they sell the NZ$s to someone who wants to buy New Zealand made goods and services.

In short New Zealand will not lose “around $15 million in earnings every year” if the Crafar farms are sold to the Chinese. For New Zealand’s wealth and prosperity, it does not matter where the profits  from New Zealand businesses end up. All that matters for the New Zealand  economy is that New Zealand remains a place where business transactions  take place – irrespective of who owns the business. New Zealand’s (real) wealth is the amount of goods and services produced each year, no matter who owns the business that do the producing. What we want is for firms to be owned by whoever will use those resources most efficiency, no matter what their nationality. Any investment that moves resources towards a more efficient use is a good investment for New Zealand, again no matter what the nationality of the investor . . .

The farms in question are already owned by foreigners – the banks which put the business into receivership.

If they were bought by New Zealanders, they’d be funded, at least in part by foreign debt, adding to our already heavily indebted state and paying interest to foreign-owned banks.

Why is paying interest to  foreign lenders not regarded as a problem if letting a foreign owner take some of the profit from their investment is so bad?


Ministers follow OIO law

20/04/2012

Land Information Minister Maurice Williamson and Associate Finance Minister Jonathan Coleman have approved the new recommendation of the Overseas Investment Office (OIO) to grant consent to Milk New Zealand Holding Limited to acquire the 16 Crafar farms.

“New Zealand has a transparent set of laws and regulations around overseas investment,” Mr Williamson says.

“Those rules recognise the benefits that appropriate overseas investment can bring, while providing a range of safeguards to protect New Zealanders’ interests. They are applied evenly to all applications, regardless of where they are from.

“We have sought to apply the law in accordance with the provisions of the Overseas Investment Act and the guidance of the High Court.

“We have carefully considered the OIO’s new recommendation. The OIO sought advice from Crown Law and independent legal advice from David Goddard QC. The Ministers also sought advice and clarification from Mr Goddard.

“We are satisfied that on even the most conservative approach this application meets the criteria set out in the Act and is consistent with the High Court’s judgment.”

The Ministers have followed the law, and the High Court’s stricter definition of it, as they are bound to do.

Opponents of land sale to foreigners won’t like it but the correct way to deal with that is to change the law, not to go against it.

Former Minister Chris Carter tried that with the Whangamata marina, was taken to court and lost.

Dr Coleman said the consent came with stringent conditions.

“These 27 conditions have been imposed to ensure Milk New Zealand’s investment delivers substantial and identifiable benefits to New Zealand,” Dr Coleman says.

The conditions require Milk New Zealand to invest $16 million into the farms and to protect and enhance heritage sites.

“The combined effect of the benefits being delivered to New Zealand as a result of this transaction is substantial.”

The land is already in foreign hands – that of the banks and the receivers are bound to get the best price for it.

I’m not convinced they went about that the best way – the farms were offered for sale individually or as a package but I don’t know if they actively tried to market them to locals.

Whether or not they did, the best offer on the table now is the one approved today.

If the land was sold to New Zealanders they would not be required to do anything with it at all, they would not have 27 conditions imposed on them nor be required to make any further investment as the purchasers, Shanghai Pengxin, are.

A copy of the OIO’s new recommendation is here.

A copy of the OIO’s decision summary is here.


Certainty and predictability needed

12/04/2012

Sir Graeme Harrison, chair of the  NZ International Business Forum, wants the Cabinet ministers considering the Crafar farm sale to Shanghai Pengxin to give a clear signal foreign investment is welcome here:

NZIBF chairman Sir Graeme Harrison makes the point that foreign investors are prepared to respect the rules but they need predictability and certainty that when conditions are complied with the investment will be able to proceed.

“That is why the current uncertain situation with regard to the Crafar Farms is so negative for New Zealand’s interests. It risks detracting from New Zealand’s attractiveness as an investment destination at a time when there is strong competition for foreign investment from other countries.”

Sir Graeme’s determined push follows a strong statement by Auckland Regional Chamber of Commerce chief executive Michael Barnett who railed against the way the Shanghai Pengxin bid had been demonised by late-comer bidders in an appearance on Q&A at the weekend.

Fran O’Sullivan has added Sir Graeme to her unofficial roll-call of business people who are finally stepping up and saying this country needs to protect its reputation as a fair regime for foreign investors.

But the big question is why is that only Sir Graeme, Barnett, BusinessNZ’s Phil O’Reilly and George Gould have been prepared to openly speak up for what matters in this area. The paucity of open debate on the pros of foreign investment is astounding and business does need to step up here.

One of the glaring omissions from the list is anyone from Fonterra.

I can’t understand why the company which sells most of its produce overseas and which itself owns farms in other countries, is opposed to foreign ownership here.

As Sir Graeme says, we need foreign investment to make up for our own lack of savings:

“Foreign investment is what plugs the gap in our low domestic savings rates. Without it, ratings agencies could react by increasing New Zealand’s (already high) credit risk rating and interest rates will rise.”

Would the people so strongly opposed to foreign investment be quite so sure of their stand if their mortgages increased without it?


Would they pay the creditors?

22/03/2012

A UMR surveys shows 70% of New Zealanders oppose the sale of the Crafar Farms to overseas investors, regardless of the buyers’ nationalities.

The poll (with a sample size of 750) was commissioned by the Crafar Farms Purchase Group and was carried out the weekend before the Labour Party unveiled its revamped overseas investment policy on March 11.

Purchase Group spokesman Alan McDonald said the poll reflected the consistent view that New Zealanders oppose the sale of productive farm land to overseas investors of any nationality.

Shanghia Pengxin has offered to pay $210 million for the farms. The Crafar Farms purchase group has offered only $171.5m.

I wonder what those surveyed would think about some $40 million in debts going unpaid if the farms weren’t sold to the people who have made the only offer acceptable to the receivers so far?

Do they realise that most, if not all, of that debt is owed to unsecured creditors, most of whom will be local people and small businesses who supplied and serviced the farms?

Do they feel so strongly opposed to the sale of the farms to foreigners that they would be prepared to pay those creditors?


Who else would they vote for?

07/03/2012

The Sunday Star Times was excited by the 100 emails Prime Minister John Key received from people opposed to the sale of the Crafar Farms to Shanghai Pengxin, calling it a heartland backlash.

One farmer said he had been a National supporter for 45 years but the agreement to sell the farms to Chinese interests ahead of New Zealanders was the “final nail in the coffin”.

Key received more than 100 emails or letters opposed to the sale, most within days of the announcement of the deal with Shanghai Pengxin.

“For many years I have voted for National and I believe in the philosophies. I am utterly disappointed at the decision to sell the farms to a foreign buyer … 2011 will be the last time I vote for National,” one said.

Another wrote: “We have always supported you, and National, but we aren’t with you on this. We have to let you know how strongly we feel about this.”

One wonders how much these people understand about the National Party’s philosophy and principles because there is nothing there that would restrict the freedom of people to sell their own land to the highest bidder nor is there anything that would support xenophobia.

Regardless of that, 100 emails isn’t many on a hot-button issue.

“Pretty much on any issue in New Zealand I’ll get 100 emails,      and sometimes I get 10,000 emails if it’s a significant      issue. So there’s a mixture of views, no doubt about that,”      he told TV One’s Breakfast show.   

Mr Key said the Crafar farms sale was not the main issue farmers raised with him.   

“Certainly I’ve been around a lot of rural events – the      Waimumu Field Days, the Golden Shears on Saturday night – and that’s not really the issue they’re coming up and talking  about,” he said.   

“Some farmers come up to me and say `Look, I own the farm, it’s my property right and I should be able to sell it to      whoever I like.’ Others say they don’t want the farmland going overseas. There’s definitely a range of views but I don’t see it hurting National support.”  

People who change allegiance on a single issue aren’t strong supporters to start with, and any farmers who think they’re not happy with National only need to look at yesterday’s debate on changes to pastoral lease rentals to see how much worse off they’d be with a Labour-led government:

The Crown Pastoral Land (Rent for Pastoral Leases) Amendment Bill will replace the land valuation basis for setting rents on  pastoral leases (on mainly high country farms) with a system based on the income earning potential of the  farm land.

Labour MP Raymond Huo said his party was opposing the bill because it was subsidising some high country farmers and did not reflect the real worth of the Crown owned land.

Agriculture Minister David Carter accused Labour of the politics of jealousy and envy and said their policies in Government had shown a “lack of care for the most fragile farming environment’’ in the country.

He said former prime minister Helen Clark had attempted to “drive’’ the farmers off the land and turn it into part of the conservation estate.

The Government now wanted to allow farmers to pay a rent based on the income they could take off the land while maintaining it for future generations. The Crown, he said, had proven to be a poor caretaker of the high country land.

The loss of tussock at the top of the Lindis Pass is a sad reminder of what happens when the Crown tries to replace the high country farmers who have looked after pastoral lease land for generations.

Another example of how poorly Labour understands farming was last year’s beat-up on how much tax they pay.

As Cactus Kate asks, if farmers aren’t going to vote for National, who would they support?

. . .  Labour who will tax the sale on their farm at 15% who along with the Greens will make them pay for their pollution and treat them as the rich pricks they deserve to be treated as?  NZ First…hehe…..

The small number of farmers who have their noses in a knot over the farm sales are shooting the wrong target.

I have nothing against the sale of the farms to foreigners but those who do should be directing the ire at the receivers who insisted on selling the farms as a job lot rather than individually.  That would have opened up a far larger number of would-be buyers and made it much easier for locals to make realistic offers.


Before and after or with and without?

01/03/2012

Did Justice Forrest Miller’s ruling on the Crafar Farm sale reflect parliament’s intention when it passed legislation governing overseas purchases of farm land?

Sally Peart, a partner in Marks and Worth Lawyers doesn’t think so:

In order for consent to be granted, the ministers must be satisfied the benefit to New Zealand from the acquisition is likely to be “substantial and identifiable”. Justice Miller’s decision turns on the way in which this assessment is made.   

The wording of the Act lists the factors to be considered and requires a determination of whether the overseas investment will, or is likely to, result in certain benefits, for example, the introduction into New Zealand of additional investment for development purposes.   

What it does not state is what the starting point for that assessment is.   

Logic and the wording of the legislation suggests the current state of affairs (in this case, the run-down condition of the Crafar farms) must be the starting point. Justice Miller      describes this as “a before and after approach”. In other words, compared with the current position, will the overseas investment result in increased benefit to New Zealand?   

Justice Miller states this approach is incorrect and ministers ought to have taken a different approach, a “with or without” approach.   

This approach looks at what would happen if the investment did not proceed. In other words, would the benefits arise anyway even if the investment did not go ahead?   

In the Crafar farms case, he concluded the benefits would arise anyway on the basis someone would buy the farms and upgrade them.

This may well be the case, but is that an approach that flows from the wording of the legislation?   

In my view, it is not. More to the point, in my view it is a considerable stretch to say the OIO’s approach is one which is misdirected as to the law.   

A New Zealand buyer could do the same upgrading and make similar other investments as a foreigner would, but there is no requirement to do so nor comeback if it’s not done.

However, if foreigners buy New Zealand farmland the OIO can impose conditions on them which they must meet.

The fact this decision by the minister has taken nine months in itself is embarrassing for us on the international stage,      let alone the fact it has now been sent back to be made again. This is ironic considering one of the relevant factors is “whether refusing the application is likely to adversely      affect New Zealand’s image overseas”. Even the “with or without” approach of Justice Miller would struggle to refute that one. . .    

It is not a simple matter and the government is seeking advice on seeking a declaratory ruling on Justice Miller’s ruling:

Prime Minister John Key said at his post-Cabinet press conference he would be“uncomfortable” if his Ministers made a decision on the bid to buy the 16 Crafar family farms without having a firm grasp on the judgment, which found the Office Investment Office “materially overstated” the benefits to the New Zealand economy of the bid.

The government is “keen to make sure that the Overseas Investment Office fully understands the judgement from Justice Miller,” he said, especially given the Michael Fay-led consortium of rival bidders has taken the matter to the Court of Appeal.

 “Until that position is clarified, I think it would be extremely dangerous for any party, either the ministers or the OIO, to move forward,” Key said. “That leaves the government in a terrible position, because Ministers ultimately could be judicially reviewed again and no-one wants to be in that position.”

Given the lack of certainty, Key said he would be surprised if the OIO made an early recommendation. 

It is a very serious matter which will seriously limit foreign purchases of farm land.

That might please the xenophobes who don’t understand the positive impacts from foreign investment but it is almost certainly not what parliament intended when the legislation was enacted.


Could isn’t would

18/02/2012

The High Court’s decision to send the decision on the Crafar farms’ sale back to the Overseas Investment Office raises the question of how could a foreign buy be better than a local one.

Shanghai Pengxin was committed to spending $14m or more if necessary to bring the farms up to scratch economically and environmentally.

It also agreed to set up an on-farm training facility for dairy farm workers and provide a couple of scholarships for trainees.

A New Zealand buyer could do all this and more but could isn’t would.

If Shanghai Pengxin was able to buy the farms it would have to fulfill its commitments local buyers would not.

This means a local buyer could get a property at a lower price than a foreign buyer was prepared to pay then do less with it.

Business New Zealand says the court ruling raises concerns over fairness and neutrality.

Chief Executive Phil O’Reilly says the decision seems to imply that future overseas investors would find it harder to succeed against a local bidder, even if the overseas investor was prepared to offer substantially more.

“If a local bidder could show that they would meet the same Overseas Investment Act criteria as an overseas bidder, then, according to the High Court decision, the overseas bidder would not be able to succeed.

“This is because the criteria in the Overseas Investment Act do not include the bidding price.

“This implies that a lower offer by a local bidder would trump a higher offer by an overseas bidder, where both bids met the OIA criteria.

“Great legal uncertainty would result from potential overseas investors meeting numerous stringent criteria then finding themselves having to meet local legal challenges.

“This could have a severe impact on the willingness of overseas interests to invest in New Zealand, just at a time when New Zealand needs every ounce of overseas capital to get our economy more productive and successful.

“This implied disadvantage against overseas investors is serious and requires scrutiny and possibly amendment to the Overseas Investment Act to ensure a fairer, more commercially neutral set of criteria,” Mr O’Reilly said?

The ruling calls into question all other decisions made by the OIO.

It will also be concerning anyone contemplating a farm sale in the near future because as Rob Hosking points out it will rule out some potential buyers.

That might please people who think land prices are too high but it will also mean bigger losses for creditors waiting for money from the sale of distressed assets.


Ministerial discretion only when there is doubt

08/02/2012

Opponents to the sale of the Crafar Farms asked why the Minister didn’t use his discretionary powers to stop it.

Land Information Minister Maurice Williamson used the address in replay debate to explain:

At 1:10  he said:

Ministers have some discretion when there are issues of doubt but it’s very clear from the Act and it was very clear from the advice given to ministers from Crown Law that no discretion exists if the applicant meets every one of the criteria that is in the current Overseas Investment Act of 2005, passed by the labour Government, and the corresponding regulations that go with it.

Ministers just can’t say well I don’t care what the law says, I’m just going to exercise a discretion nd say no. because I have to tell members of this House there’s such a thing as a judicial review and you would lose it. You would simply lose the case. If the Minister was taken to judicial review . . . he or she would lose the case if they weren’t able to say . . . “I declined this because”.

 At 02:55 he said:

 . . . in the case of Shanghai Pengxin looking to buy these farms, Sir, they met every one of the criteria that is laid down in the Act passed by the Labour government and they met every one of the criteria laid out in the regulations. And remember National even added two more to try and strengthen the Act and the regs so that we did have a little bit more say and all of those were met as well.

When David Shearer and David Parker from the Labour Party said, “we would have said no  my very first question to them is: “On what grounds would you have said no?” Because remember you don’t just have the final say in this there are courts and governments have been found to have acted  inappropriately by the courts on a number of things and they’ve overturned ministers’ decisions.

One of those was Chris Carter on the Whangamata marina proposal who lost the court case because he didn’t follow the proper procedures.

That was a very expensive reminder that the government isn’t above the law.

At 5:57 he explains the difference between gross and net figures on land sales.

He gave examples of land sold to people from other countries who bought large tracts of land which were approved and supported by Labour and not criticised.

At 9:14 he demonstrated the difference in size between the 66,000  660,000 hectares sold under Labour compared with the 7,000 hectares of the Crafar farms.

He pointed out that Labour didn’t campaign on changing the law to prevent the sale of land to foreigners and concluded by saying  we should welcome the investment that comes from foreign investors and the growth that comes to our economy so long as they are quality investors of high character who are going to benefit this country.

Hat tip: Keeping Stock


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